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The 53.2 billion gallon a year (BGY) biofuel industry is poised for a huge slowdown in capacity growth, to a 3.2 per cent annual rate from 2013 to 2017 – reaching 60.4 billion gallons – off from 19.6 per cent annually from 2005 to 2013, according to Lux Research.

The sharp decline is on account of a significant industry transition to novel fuels and feedstocks, to enable long-term growth in the face of impediments like the food vs. fuel debate and the imminent blend limits for biodiesel and ethanol. Next-generation biofuels – such as renewable diesel and butanol – that can offer higher blends, in contrast, are not quite mature.

“Meanwhile, next-generation fuels like renewable diesel will break down current barriers and drive long-term biofuel capacity expansion,” he added.

To quantify global capacity expansion of biofuels, Lux Research analysts built a database of over 1,700 biofuel production facilities in 82 countries with capacity data through 2017, besides evaluating leading technology providers. Among their findings:

Ethanol’s dominance will continue. Ethanol, which accounted for 65.9 per cent of global biofuel capacity in 2013, will slightly increase its share to 66 per cent in 2017. Other fuels, such as renewable diesel, butanol, biojet and biocrude, will grow at a significantly higher 18.7 per cent annual rate, but remain just 3.3 per cent of all biofuels.

Renewable diesel leads next-generation biofuels. Driven by technology, renewable diesel will emerge as the leading next-generation fuel, attaining a capacity of 1.1 BGY in 2017. Renewable diesel from waste will emerge as a key biofuel process.

Growth of cellulosic ethanol will be slower. Companies led by Beta Renewables, POET-DSM and Abengoa have announced 782 MGY of cellulosic ethanol capacity but only 384 MGY will come to fruition.

About Lux Research

Lux Research provides strategic advice and ongoing intelligence for emerging technologies. Leaders in business, finance and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections and competitive advantage to our clients. Visit www.luxresearchinc.com for more information.